The New Conduct Rules

The New Conduct Rules


 You can download a full copy of the slides from this webinar. 




Full transcript available below:

Welcome and thank you for joining today's webinar hosted by me, Bethany Sirven of MyComplianceOffice, and Gregory Brandman and Simon Collins of Eversheds Sutherland.

Very briefly then, the conduct rules. These will in terms of their scope apply to a firm's regulated and unregulated financial services activities and any related ancillary activities. As I've said, they will replace the APER principle of guidance which currently only apply to approved persons, and they will extend to all staff employed by firms that carry out a non-ancillary role.


Five baseline conduct rules, four rules that apply just to senior managers, and firms will need to notify the FCA going forward when they've taken disciplinary action against staff for breaching these conduct rules, and obviously firms will be obliged to train their staff so that they know what the rules are and how they apply in practice. If we can look at the next slide, we can take a look at what the rules actually are. On the right-hand side you've got the five baseline rules that will apply to all non-ancillary staff at regulated financial services firms going forward.

These rules are essentially the same as the four rules under APER that currently apply to all approved persons including CF30s, a requirement to act with integrity, to act with due skill, care, and diligence, to be open and cooperative with regulators and to observe proper standards of market conduct. Those essentially are APER one to four, though of course they, as I've said, they now apply to all of your staff engaging in regulated or unregulated financial services or ancillary activity. The new rule here is conduct rule four, which requires all staff to pay due regard to the interests of customers and treat them fairly. This has always been a principle for businesses, but it will now be a rule that applies specifically to your staff.

On the left-hand side of the page you've got the four rules that will apply to senior managers. The first two essentially are restatements of APER statements of principle five and seven, so not much that's new there. The third rule is new, which talks about delegation and the need to delegate reasonably and effectively and to oversee the discharge of delegated responsibilities effectively. That is a new rule but it has of course always been guidance under APER. The fourth senior management conduct rule which will apply to non-executive directors who don't hold senior management functions as well as all senior managers require them to disclose appropriately any information of which the FCA or the PRA would reasonably expect notice.

You may be forgiven for thinking that this overlaps to a degree with baseline conduct rule three, but it doesn't. Baseline conduct rule three is very much a reactive obligation where the regulator approaches you for information, you must be open and cooperative. Senior manager conduct rule four is a much more proactive obligation of disclosure requiring senior managers to bring to the attention of regulators information of what they would reasonably expect notice, and it essentially tracks principle 11 of the principles for businesses, a much more proactive obligation of disclosure, mindful that senior managers will potentially have much more sensitive and interesting information that needs to be drawn to the attention of regulators in due course.

Next slide please. I set out on the two following slides some detail about what might constitute a breach of firstly the baseline conduct rules and then on the next slide what could constitute a breach of the senior manager conduct rules. There's a wealth of guidance on this on the FCA handbook. It's quite difficult to reduce that guidance to a couple of slides, but it's there for you to look at, but I would encourage everyone to look at the consultation paper and the section in COCON, which really sets out some quite helpful guidance on what compliance and non-compliance with these rules actually looks like.


Download our whitepaper "Senior Managers and Certification Regime. How to Prepare Your Organisation"


This webinar was co-hosted with Eversheds-Sutherland

Find out how MCO can help

Request a demo today to learn how MyComplianceOffice puts you in command of your compliance program, synchronizing your business needs with regulation. 

Request a Demo



Download our four page Portfolio of Solutions to learn about;

  • Personal Trade Monitoring
  • Gifts & Entertainment
  • Political Contributions
  • Third Party vendor risk management
  • Trade surveillance
  • And more

Brochure Download